Steve Wynn just sent out a ‘forceful’ message and his company's stock is going bonkers

Wynn Entertainment stock is up 15% in early trading Wednesday on
the news that the CEO Steve Wynn bought 1 million shares of the
company.

Wynn Entertainment's stock price has plummeted in the last two
years, dropping from a high of $246.65 in March 2014 to around
$72 today.

That is the direct result of the Chinese government's changed
stance on gambling in Macau.

Over the last year and a half, the government has limited foot
traffic to the island, started monitoring how much cash Chinese
people use there, placed cameras in VIP rooms, limited the
number of tables allotted to new projects, and scared off high
rollers concerned with getting ensnared in Chinese president Xi
Jinping's wide-reaching anticorruption drive. Casino
revenues have plummeted.

That makes Wynn's share purchase especially meaningful.

"Given this is the first meaningful insider purchase and
the first sizeable open market purchase by Mr. Wynn in some time,
and given current short interest levels (18% of the float), it
should come as little surprise that shares are up," Deutsche Bank
wrote in a note following the purchase.

"Furthermore, in our view, anytime a CEO buys a meaningful
stake it sends a favorable message. However, in this instance,
and assuming the shares are included in the unilateral agreement,
which makes selling very difficult, we view the message as that
much more forceful."

Wynn has only two properties, one in Las Vegas and one in Macau.
The Macau casino is hurting, and so Wynn is hurting.

A
protester stands behind a banner during a demonstration by
investors against Wynn Macau and Dore Entertainment outside Wynn
Macau in Macau, China, November 20, 2015.Reuters

For months protestors have been picketing outside the Macau
property. They're investors demanding to be paid after a thief
absconded with millions of dollars from a VIP room that was
then shut down. In Macau VIP rooms are funded by junkets —
companies that pool people's money to lever up high roller bets
and share the profits with investors.

The junket that was robbed, Dore Entertainment, didn't owe Wynn
any money, but the robbery hurts all the same.

New project

One can imagine that this is probably not the most favorable
environment to open a new casino, but that's what Wynn is slated
to do next year. There's a ton of uncertainty. The government
allotted a project that opened earlier this fall fewer tables
than expected, and no VIP tables whatsoever.

It's clear that Wynn isn't sure what's going to happen to his
project, which should open in June after a three-month delay.

"It's become a major issue in Macau ... the impact of
government policy in planning,"
Wynn said on a conference call in October. "None of us are
really clear as to what our environment will be going forward. It
makes planning and adjusting almost a mystical process."

What isn't mystical, though, is the fact that Wynn now owns
11% of the outstanding shares in his company.